Free Realms shares features with established titles such as Club Penguin, offering players a variety of mini-game experiences

This spring sees Sony Online Entertainment (SOE) enter the tween and teen market with the virtual world Free Realms. The brainchild of the company's president, John Smedley, it's free-to-play via a streaming browser offering a wide variety of mini-game experiences, which in SOE's words pay homage to popular games such as Bejeweled and Mario Kart.

Although said to appeal to anyone from eight to 80, the core target audience is 10- to 14-year-olds. It replaces the classic massively multiplayer online game (MMO) class system with "jobs", each related to themes within the mini-games. As a ninja, compete in combat games, or don your apron and rise to Cooking Mama-style challenges. The key is that gamers can become who they want whenever they want, under the umbrella of one avatar.

SOE says Free Realms is unique, yet it clearly shares many features with its free-to-play competitors. Aspects of established titles such as Club Penguin, MapleStory and RuneScape abound, so following their lead could be the route to success in an already crowded market.

Of course, the key to survival has to be getting gamers to pay, but with a young, school-attending core audience and a free-to-play model, how can they generate an income stream? According to Smedley, it's easier than you may think.

Pocket money pickings

"To the outside observer it appears a tough place to get money from, but it's actually the opposite. We've built a game that has a lot of value for free players, but we've put in a lot of hooks," he says.

Free-to-play titles have a number of money-making tools. Many offer tiered membership, giving subscribers additional content. A few use banner advertising. Others offer "microtransactions" that focus on character customisation.

As Sung Jin Kim, the Europe business team manager of Nexon, which publishes MapleStory, says: "An in-game avatar represents an 'ideal portrait of myself' in the cyberworld. Teens and tweens are very active in expressing their own individuality and don't hesitate to spend money on expressing it well."

Free Realms's revenue streams focus on this appeal. It offers a plethora of customisation purchases ranging from pence to pounds, including clothes, pets and racing-car parts. It's also fine-tuning a low-cost UK subscription price.

But how do you get the cash from the kids, and how can parents control their spending? SOE uses currency called Station Cash for in-game purchasing, which parents can top up when they choose. They decide how much "pocket money" is given, and the children choose how and when they spend it. SOE has also focused on physical purchases. If parents don't approve of virtual allowances, children can spend their money on cards that equate to Station Cash or virtual items. Sony's keen to get their money, though: in Europe it's adding SMS billing, bank transfers and PayPal.

Although competitors don't feel threatened by the launch of Free Realms, some are concerned that titles of its ilk will create misconceptions about the genre.

"A lot of the free offerings are sadly misleading because they're not. Most of them rely on the microtransaction system, which is really a stealth tax; I prefer to call it death by a thousand cuts," says Mark Gerhard, the chief executive of RuneScape's creator, Jagex. His titles solely use advertising and membership revenue streams; there are no in-game transactions.

"It's the psychology of it. You can better monetise a person taking 20 cents off them for every item, than to ask someone for $10 up front. Commercially you can say it's a great opportunity, the way of the future. Ethically you can say it devalues the product."

SOE's competitors don't seem concerned that Free Realms could take a slice of their pie, but there can't be unlimited amounts of money for the taking. Surely someone has to lose for Sony to win? Titles such as Club Penguin and sites such as Pogo.com may temporarily lose players, but by having loyal, entrenched audiences, they're expected to return.

Expanding worlds

However, many wonder how much success Free Realms will find. "The game seems confused: it's inspired by RuneScape but targeting Club Penguin," says Gerhard. "My expectation is it'll be a damp squib."

Smedley, however, feels strongly that Free Realms will cement its position as a market force before the sector becomes overwhelmed. Although he cites industry stats of 17% average annual worldwide growth for free-to-play titles, even he believes it may hit saturation in the next few years.

No market expands for ever, but for now, at least, free-to-play gaming is mirroring the ongoing success of the games industry overall. If anything, with more people currently focusing on value for money, the genre's appeal is likely to grow.

"When you think of the cost of a cup of coffee or of renting a movie, you're looking at a short period of enjoyment for the same cost of something like Club Penguin, where you can get a month of entertainment," notes Lane Merrifield, one of the game's founders and executive vice president of the Disney Interactive Media Group.

As Gerhard puts it, nothing beats the recession like a free game. Sure, you can spend cash, but how and when you choose. "It's been shown over many recessions that the gaming industry weathers them well," says Smedley. "Given the fact there's so many ways to pay and play the game, we feel this is good value at a time when the economy is as bad as it is."